MGE Energy Inc (MGEE)
Debt-to-equity ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 763,697 | 718,822 | 585,246 | 614,211 | 519,303 |
| Total stockholders’ equity | US$ in thousands | 1,230,140 | 1,140,070 | 1,081,670 | 1,027,470 | 976,000 |
| Debt-to-equity ratio | 0.62 | 0.63 | 0.54 | 0.60 | 0.53 |
December 31, 2024 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $763,697K ÷ $1,230,140K
= 0.62
The debt-to-equity ratio for MGE Energy Inc has shown a slight increase over the past five years, from 0.53 as of December 31, 2020, to 0.62 as of December 31, 2024. This indicates that the company has been gradually relying more on debt to finance its operations compared to equity.
While an increase in the debt-to-equity ratio can sometimes signal financial leverage and potential for higher returns, it can also increase the financial risk for the company. Investors and creditors closely monitor this ratio to assess the company's ability to meet its debt obligations and manage its financial leverage effectively.
It is advisable for MGE Energy Inc to continue monitoring its debt levels and ensure that the increased debt financing is being utilized efficiently to generate returns that exceed the cost of debt. Additionally, the company should maintain a balanced capital structure to mitigate the risks associated with excessive debt levels.